Correlation Between Solar Integrated and Meyer Burger

Can any of the company-specific risk be diversified away by investing in both Solar Integrated and Meyer Burger at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solar Integrated and Meyer Burger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solar Integrated Roofing and Meyer Burger Technology, you can compare the effects of market volatilities on Solar Integrated and Meyer Burger and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solar Integrated with a short position of Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Integrated and Meyer Burger.

Diversification Opportunities for Solar Integrated and Meyer Burger

0.18

Correlation Coefficient

Solar Integrated  Meyer Burger

Average diversification

The 3 months correlation between Solar and Meyer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Solar Integrated Roofing and Meyer Burger Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Technology and Solar Integrated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solar Integrated Roofing are associated (or correlated) with Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Technology has no effect on the direction of Solar Integrated i.e., Solar Integrated and Meyer Burger go up and down completely randomly.

Pair Corralation between Solar Integrated and Meyer Burger

Given the investment horizon of 90 days Solar Integrated Roofing is expected to generate 4.05 times more return on investment than Meyer Burger. However, Solar Integrated is 4.05 times more volatile than Meyer Burger Technology. It trades about 0.17 of its potential returns per unit of risk. Meyer Burger Technology is currently generating about 0.1 per unit of risk. If you would invest  0.02  in Solar Integrated Roofing on September 18, 2024 and sell it today you would lose (0.01) from holding Solar Integrated Roofing or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Solar Integrated Roofing  vs.  Meyer Burger Technology

Solar Integrated Roofing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Integrated Roofing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Solar Integrated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Meyer Burger Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Integrated and Meyer Burger

The main advantage of trading using opposite Solar Integrated and Meyer Burger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Integrated position performs unexpectedly, Meyer Burger can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Meyer Burger will offset losses from the drop in Meyer Burger's long position.

The idea behind Solar Integrated Roofing and Meyer Burger Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .